Abstract

This study examines whether auditors’ client-specific and pre-client experience affect the audit quality of firms during the first year following mandatory audit-partner rotation (henceforth “first year following rotation”). Our client-specific experience measure is the cumulative number of pre-rotation years an audit-partner holds. We use two measures for pre-client experience: industry-specific and general. We find some evidences that either client-specific experience or pre-client experience improve earnings quality of firms during the first year following mandatory audit-partner rotation. Our findings suggest that the board of corporate directors should consider prior auditor experience when rotating audit partners.  

Keywords

audit partner rotationclient-specific experiencepre-client experience